The reinstatement of EU duties, declining domestic demand, and China's ban on using milk powder for drinking milk production are putting additional pressure on purchase prices and forcing dairy farms to cut production costs and gradually reduce milk yields. It's not profitable for dairy farms to increase milk yields because milk processing enterprises cannot buy raw milk at adequate prices, reports Georghii Kukhaleishvili, an analyst at the Association of Milk Producers.
According to preliminary data from the Ministry of Agrarian Policy, in May 2025, farms of all categories produced 685 thousand tonnes of raw milk, which is 81 thousand tonnes more (+13%) than in April 2025, but 53 thousand tonnes less (-7%) than in May 2024. In January-May 2025, milk yields in Ukraine totaled 2.73 million tonnes, which is 132 thousand tonnes (-5%) less than in the same period last year. In May 2025, the share of enterprises in raw milk production was 39%, and household farms accounted for 61%.
Enterprises produced 270.1 thousand tonnes of raw milk in May 2025, which is 200 tonnes more (+0.1%) compared to April 2025 and 5 thousand tonnes more (+2%) compared to May 2024. In January-May 2025, dairy farms produced 1.31 million tonnes of raw milk, which is 58 thousand tonnes more (+5%) than in the same period last year.
In household farms, milk yields in May 2025 amounted to 415 thousand tonnes of milk, which is 81 thousand tonnes more (+24%) compared to April 2025, but 57 thousand tonnes less (-12%) compared to May 2024. In January-May 2025, the household sector produced 1.42 thousand tonnes of raw milk, which is 190 thousand tonnes less (-12%) than in the same period last year.
Georghii Kukhaleishvili notes that the growth rates of raw milk production in Ukraine's industrial sector since the beginning of 2025 have been among the best in Europe and the world. Specifically, New Zealand and the USA increased milk yields by only 0.2% in January-April, and Uruguay by 3%. Dairy farms increased milk production despite Russian missile and bomb attacks, relocation, and rising production costs.
However, despite the production increase in the industrial sector, the volume of milk yields in household farms continues to decline year-on-year. It is likely that if household farms do not consolidate by 2030, their milk will cease to be supplied for processing and will be used for self-consumption. The increase in May milk yields is likely related to seasonal factors, increased pastures in spring, and improved feeding conditions for cows in household farms.
In January-May 2025, dairy farms increased raw milk production volumes in 12 regions. Among the new leaders in production volumes are Khmelnytskyi, Ternopil, and Zhytomyr oblasts. However, milk yields slowed down at dairy farms in Kharkiv Oblast, despite demonstrating production growth in the first quarter. This uncertain situation in the dairy market and the position of milk processing enterprises likely do not contribute to increasing milk yields at agricultural enterprises.
Domestic milk processing enterprises with outdated technological bases are unable to compete in quality with enterprises in developed countries. Therefore, they are not willing to buy raw milk at adequate prices, as they sell their products at lower prices to withstand competition in export markets. However, with rising milk production costs, low purchase prices do not serve the interests of milk producers. In current conditions, it's not profitable for them to significantly increase milk yields, and their priority is to reduce production costs at dairy farms.
As demand for dairy products in the domestic market declines, future prices will be influenced by the export situation of exchange-traded commodities from Ukraine, namely butter. Over the past year, Ukraine has increased butter supplies to foreign markets fivefold. In 2024, butter prices were the driver of raw milk prices. However, the European Commission's reinstatement of quotas and duties on domestic agricultural products from June 5 and the cancellation of autonomous trade measures (ATMs) for milk and dairy products from Ukraine will likely contribute to lower purchase prices in the domestic market. These benefits allowed domestic processing enterprises to supply their products to Europe without trade barriers since 2022.
The reinstatement of duties will likely lead to a reduction in dairy product exports from Ukraine to the EU. Reorienting dry milk exports to the Middle East and North Africa will not be an alternative to the European market for Ukrainian companies in terms of revenue. If domestic milk processing enterprises plan to dump prices to compete with commodity suppliers from New Zealand and South America in these markets, milk producers will be offered lower purchase prices. The resumption of cheese and other dairy product exports to pre-war volumes to former USSR countries, particularly Kazakhstan, is problematic due to disrupted logistics chains and competition from producers from Russia and Belarus.
Purchase prices in Ukraine may also be affected by the ban introduced by the Chinese government in May on reconstituting milk powder into drinking milk. From now on, drinking milk in China can only be produced from raw milk. The Chinese government took such measures to protect the interests of national producers amidst an economic downturn, deteriorating living standards in China, and reduced domestic consumption of dairy products. These changes are a challenge for Ukrainian companies, as China's share accounts for about 40% of dry milk export destinations. Large dry milk exporters like New Zealand and the EU must change their supply directions, which will intensify competition in other sales markets.
The increasing supply of imported cheeses in the domestic market hinders the sale of domestically produced goods, does not contribute to the growth of demand for raw milk among cheesemakers, and puts pressure on prices.
It's worth noting that the largest increases in milk production were recorded by agricultural enterprises in Zakarpattia Oblast (+25%), Lviv Oblast (+25%), Khmelnytskyi Oblast (+18%), Mykolaiv Oblast (+15%), Vinnytsia Oblast (+9%), and Chernivtsi Oblast (+9%) compared to the same period last year.
In January-May 2025, approximately 55% of raw milk was produced by agricultural enterprises in the following oblasts:
- Poltava Oblast – 200.3 thousand tonnes;
- Cherkasy Oblast – 161.1 thousand tonnes;
- Khmelnytskyi Oblast – 126.7 thousand tonnes;
- Vinnytsia Oblast – 117.7 thousand tonnes;
- Chernihiv Oblast – 117 thousand tonnes.
As for beef production, according to preliminary estimates from the Ministry of Agrarian Policy, in May 2025, cattle slaughter volumes totaled 13.7 thousand tonnes, which is 3 thousand tonnes less (-18%) compared to April 2025, but 1.7 thousand tonnes more (+14%) compared to May 2024. In January-May 2025, cattle slaughter volumes in Ukraine amounted to 74.6 thousand tonnes, which is 5 thousand tonnes less (-6%) compared to the same period last year. In May 2025, enterprises produced 43% of beef from the total slaughter volume, and household farms produced 57%.
In May, cattle slaughter volumes at agricultural enterprises were 5.9 thousand tonnes, which is 500 kg less (-8%) compared to April 2025, but 1.4 thousand tonnes more (+31%) compared to May 2024. In January-May 2025, cattle slaughter volumes at agricultural enterprises amounted to 32.2 thousand tonnes, which is 500 tonnes less (-2%) compared to the same period last year.
In household farms, cattle slaughter volumes in May were 7.8 thousand tonnes, which is 3 thousand tonnes less (-25%) compared to April of this year, but 300 tonnes more (+4%) compared to May 2024. In January-May 2025, cattle slaughter volumes in household farms amounted to 42.4 thousand tonnes, which is 4.3 thousand tonnes less (-9%) compared to the same period last year.
Total slaughter volumes of agricultural animals, including not only cattle but also pigs, sheep, and poultry, in January-May 2025 amounted to 1.24 thousand tonnes, which is 5% less than in the same period last year. Slaughter volumes increased at agricultural enterprises in 12 regions. The most significant increases in slaughter volumes were recorded at agricultural enterprises in Zakarpattia Oblast (+215%), Zaporizhzhia Oblast (+38%), Kharkiv Oblast (+34%), Mykolaiv Oblast (+32%), and Rivne Oblast (+21%).
The largest share (74%) of animals sold for slaughter by agricultural enterprises was in the following oblasts:
- Vinnytsia Oblast – 254.2 thousand tonnes;
- Cherkasy Oblast – 170.6 thousand tonnes;
- Dnipropetrovsk Oblast – 147.8 thousand tonnes;
- Lviv Oblast – 72.8 thousand tonnes;
- Kyiv Oblast – 52.7 thousand tonnes.
Press Service of the Association of Milk Producers
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